April 15, 2010

Want to save fuel? Make it more expensive.

Relax; I'm not talking about Canadian fuel prices...

More proof (as if more proof were needed) that the quickest way to a more fuel-efficient fleet of automobiles in those Benighted States of America is higher fuel prices comes from the American equivalent of our CAA.

The American Automobile Association's annual 'Your Driving Costs' publication says rising gas prices - an average of 12.7 percent higher - were largely responsible for the 4.8 percent overall increase in the cost of your 'ticket to drive'.

Where does the 'more fuel-efficient fleet' come in?

That same publication also indicates that the market is moving to smaller compact sedans (which has been Canada's largest segment for approximately ever).

It's not just sales numbers either, but a number not every car owner initially might even think of - the expected resale value of the car.

Compact sedans were the only segment which saw depreciation - the biggest single cost component of owning a car, if perhaps not the most visible - decrease from the 2009 edition. Compact sedans went down 2 percent, medium sedans (the US's biggest car segment) were up by just under one percent, large sedans were up by 6.1 percent.

The biggest jump, perhaps not surprisingly, was in big SUVs - up by 10.7 percent.

Because depreciation is the determinant for the residual value which determines the monthly rate for a lease, it means compact cars are not only cheaper to run, they are cheaper to own.

Double your pleasure, double your fun - double your savings.

Now that President Obama has managed to railroad through at least a smattering of national health care down there, you don't suppose he'd have the guts to try and bring some sanity to fuel pricing too, do you?

Everyone says this is politically impossible.

But a federal fuel tax which would bring the price of fuel to within even shouting distance of the Canadian price (let alone world pricing) would pay for that health care plan almost immediately. AND, allow the US to afford to invade every country it wanted to invade, all at once.

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The average taxes charged on fuel in the USA is roughly half of what is charged in Canada: $0.51/gal in the US, $1.19/gal in Can (in US$) based on 2009 figures. As we've all seen, any kind of significant increase in fuel costs results in an increase in just about everything else due to increased shipping costs. This means an increase in inflation. Given the current state of the US economy (which is still in serious trouble), any kind of serious increase in the price of gas would likely turn their "Great Recession" into an actual depression. And I honestly believe it will be years before the USA economy fully recovers. So unless the entire US Congress decides to commit political suicide, the chances of a significant increase in the US Federal gas tax is zero.

Dear Mr. McKenzie,
I am sure you are right when you suggest raising the price of fuel to curtail use. It seems to have some effect on the American drivers. Fewer trips. However, we are conscious of using more fuel when in the US than we do in Canada. I have discussed this with a local mechanic here in Florida and he blames the amount of corn juice in the gasoline. We usually get around 25 miles to the gallon in Canada but our milage drops to 17 miles to the gallon here in Florida. is it possible the amount of corn in the fuel has an effect on milage?
Thank you in advance for your interest in this matter.
Sincerely,
Bill Trent.